Structural Estimation of Rank-Order Tournament Games with Private Information

Tomislav Vukina and Xiaoyong Zheng ()

No 21059, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: In this paper we propose a game-theoretic model of a rank-order tournament with private information and characterize its equilibrium solution. The model captures many important features of the production contracts once observed in the poultry industry. We use the contract settlement data from a poultry company who used rank-order tournaments to remunerate their contract growers and estimate a fully structural model of a symmetric Nash-equilibrium of this game. We show that growers' equilibrium effort depends on three factors: the spread in piece rates between the performance brackets, the number of players in each tournament, and the number of performance brackets used. We use the estimates of the productivity shocks density to simulate how changes in these three tournament characteristics affect the total welfare and the distribution of welfare between the growers and the integrator.

Keywords: Research; Methods/; Statistical; Methods (search for similar items in EconPapers)
Pages: 25
Date: 2006
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Journal Article: Structural Estimation of Rank-Order Tournament Games with Private Information (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21059

DOI: 10.22004/ag.econ.21059

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